Issues in Modelling the Mega-Regionals

Abstract

Modern economic partnership agreements like the TPP, TTIP, and RCEP address a wide range of areas of commercial regulation with varying levels of commitments. Estimates of their impacts vary widely, raising questions about the models and modelling protocols used to derive them. Issues of major significance for evaluating the scale and structure of impacts and ultimately the national interest include: (a) calibrating the productivity impacts implied by modern heterogeneous firms theory; (b) accounting for the impact on corporate asset values implied by the intellectual property measures; (c) translating the services commitments into trade impacts, including: the use of recently developed services trade restrictiveness indexes to capture the value of binding existing market access; choice of measures of protection; and the significance of cross-country price differentials; and (d) evaluating the implications of investment chapters for FDI. Ours is an age of FTAs: the presentation will reflect on how well we understand them and their impacts on our economies.

Keywords: Mega-Regional Trade Agreements, CGE Models, Wage-Productivity Relationship, Intellectual Property, Asset Values, Services Trade, Foreign Direct Investment

JEL Classification: F13, F14, F68, O31, O33, O34, O38